“Whether you look for statistically significant alpha or Sharpe ratios, there’s virtually no risk-adjusted outperformance to back up the marketing claims,” she writes. Read her take in full at ETF.com.

Smart beta ETFs occupy a spot between plain-vanilla index-based investing and traditional active management, as shown in the adjacent diagram from Morningstar. Many in the ETF industry prefer other labels for these index-based products, such as “alternatively weighted” or “strategic beta.”

“Part of the issue is you’re dealing with a relatively tight time window,” he said in a phone interview on Friday, referring to the ETF.com findings.

Lazzara, who helped SPLV come into existence, said it’s quite possible some of these ETFs aren’t marketed properly, but he defended how his company and PowerShares talk about this space. With SPLV, they emphasize that its low-volatility approach won’t top the S&P 500′s
/quotes/zigman/3870025/realtimeSPX return in a big year for stocks like 2013, he said.

“Low vol is going to underperform,” he said. “We make a point of saying that.”

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